socially r esponsible investment using retail eligible bonds
DESCRIPTION
Socially R esponsible Investment Using retail eligible bonds. 8 th October 2014. Socially Responsible Investment Opportunity Investor base Using the Retail Charity Bond Platform The benefits for housing associations. A largely untapped market. Socially Responsible Investment. - PowerPoint PPT PresentationTRANSCRIPT
PRIVATE & CONFIDENTIAL
Socially Responsible InvestmentUsing retail eligible bonds8th October 2014
Socially Responsible Investment
Opportunity
Investor base
Using the Retail Charity Bond Platform
The benefits for housing associations
A largely untapped market
A largely untapped market
A very wide investor base SRI funds run by household name managers Retail investors Conventional wholesale investors
Shortage of investments with positive social impact Most funds negatively vet Positive impact funds out perform
Need conventional investment A normal listed bond or equity Generating a commercial return Plus as social impact statement
Socially Responsible Investment
(1) Sallie Krawcheck, former head of Bank of America's global wealth and investment management division at Reuters Global Wealth Management Summit Reuters 7 June 2013
(2) EIRIS estimate as at 30th June 2013 based on around 80 UK domiciled green and ethical retail funds
"The first 600 times I heard about impact investing, I thought 'tree huggers’.
But the ability to use one's capital to support what one believes in without giving up performance is becoming increasingly appealing." (1)
Ethical/ ESG Market
£12.2bn + (2)
Positively vetted social impact
investors
Housing associations are ideal candidates
Commercially run for social benefit− Non distributing− Clear social/charitable purpose− Well managed− With additional social benefit
Strong credits− Good operating ratios− Income generating and Asset backed− Regulated
Mainstream− Borrow from banks− Issue bonds
Socially Responsible Investment
Simple
Cheap
Flexible
Tapping into the widest possible market
Looking for medium term investments with social impact
Retail investors
Family offices
Retail bond funds
SRI bond funds
Wholesale investors
Pension Funds
Charities & Foundation
s • Commercial return• Medium dated (7-15
years)• Normal bond or
equity• Listing on stock
exchange• Small denomination• Social impact
statement• No need for rating• No need for security
Wide distribution
Institutional SRI Funds and Charity Fund Managers and Retail Distributors
Killik & Co
The SRI Bond Market
Expanding the Investor Base
Investors in A2D’s last retail eligible bond issue Golden Lane Retail Charity Bond
Institution 8%
SRI Fund/Manager
36%
Retail Wealth 12%
Execution only Brokers
33%
Stockbrokers12%
Greater grass roots involvement
Stockbroker18%
Retail Wealth24%
Execution-Only Broker
1%
Institution44%
SRI Fund13%
Available for large and small transactions
Direct own name issue
Own name bond issue
Unsecured
Can be used anywhere in group for any purpose
Cost effective at £50m +
Rating preferred
6-8 week lead time
Simple covenants
Accessible through two routes
Borrowing through Retail Charity Bonds
Loan with RCB plc but own branding on bond issue
Unsecured
Can be used for non core, charitable/community activities
Cost effective at £10m +
No rating required
8-10 week lead time
Simple covenants
Retail Charity Bonds
Raising £10-50m unsecured loan finance from ethical investors through bonds listed on London Stock Exchange
The purpose
Retail Charity Bonds
Established charitable organisations
Strong credit worth
Seeking £10-50m for charitable purposes
Typically looking to acquire capital assets, invest in facilities or finance existing assets more efficiently
Who it’s for
Retail Charity Bonds
Established issuing structure
Independent review process
Standardised documentation
Bond administration managed by Allia
What it offers
Retail Charity Bonds
How it works
Investors
Investments in bonds Retail
Charity Bonds PLC
Charity
Loan
Loan interest and principal + fees
Bond interest and principal
Allia(Servicer)
Retail Charity Bonds
Golden Lane Housing Bond
Providing homes for people with a learning disability
Offered 4.375% for 7 years
Raised £11m in 8 days
60% retail, 40% institutional
Simple
What is the relevance to housing associations
Bond Issue…..BUT with no security
7 to 12 Year Term
Available in small & large amounts
CheapFunding for development
Funding for Commercial activities
4 to 4.5% fixed
Can be lent anywhere in group
Lightly covenanted
Value from unchargeable assets
FlexibleMakes use of social value
added
A large market
Accessed widely through retail eligible products
Directly or through Retail Charity Bonds
Simple, flexible and cost effective
Maximising use of social value
Summary
Important Notice
Neither the whole nor any part of the information in this pitch/presentation may be disclosed to, or used or relied upon by, any other person or used for any other purpose and, in particular, should not be distributed outside the United Kingdom, without the prior written consent of Canaccord Genuity. The material contained herein may include unpublished price sensitive information, the misuse of which may result in criminal and/or civil proceedings against you.
None of the information on which this pitch/presentation is based has been independently verified by Canaccord Genuity or any of its connected persons. Accordingly, neither Canaccord Genuity nor any of its connected persons accepts any liability or responsibility for the accuracy or completeness of, nor makes any representation or warranty, express or implied, with respect to, the information on which this pitch/presentation is based or that this information remains unchanged after the issue of this pitch/presentation.
No duty of care or otherwise is owed by Canaccord Genuity or any of its connected persons to any other person in relation to this pitch/presentation.
The valuation in this pitch/presentation has been prepared on the bases and assumptions described herein. This pitch/presentation is not intended to provide the basis of any investment decision and should not be considered as a recommendation by Canaccord Genuity or any of its connected persons to any recipient of the pitch/presentation. No person has been authorised to give any information not contained in this pitch/presentation.
Nothing in this pitch/presentation is, or should be relied on as, a promise or representation as to the future.
This pitch/presentation may only be communicated in the United Kingdom to:
investment professionals, such persons having professional experience in matters relating to investments of this kind and who fall within Article 19 of the Financial Conduct and Markets Act 2000 (Financial Promotions) Order 2005 (the “FPO”); High net worth companies or high net worth unincorporated associations falling within Article 49 of the FPO; Persons who are already shareholders of the Company within article 43 of the FPO; and Any other person to whom this promotion may lawfully be directed.
This document will only be available to the categories of persons in the United Kingdom described above and any other person should seek their own independent legal, investment and tax advice as they see fit.
In this notice, “Canaccord Genuity” means Canaccord Genuity Limited and “its connected persons” means, the holding company of Canaccord Genuity Limited, the shareholders, subsidiaries and subsidiary undertakings of that holding company and their respective directors, officers, employees and agents of each of them.
Distributed in the UK by Canaccord Genuity Ltd. Canaccord Genuity is authorised and regulated by the Financial Conduct Authority ('FCA') (with firm reference number 182011) and is a member of the London Stock Exchange. The FCA's principal place of business if at 25 North Colonnade, London, E14 5HS.